Correlation Between Super Energy and Gozco Plantations
Can any of the company-specific risk be diversified away by investing in both Super Energy and Gozco Plantations at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Super Energy and Gozco Plantations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Energy Tbk and Gozco Plantations Tbk, you can compare the effects of market volatilities on Super Energy and Gozco Plantations and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Super Energy with a short position of Gozco Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Energy and Gozco Plantations.
Diversification Opportunities for Super Energy and Gozco Plantations
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Super and Gozco is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Super Energy Tbk and Gozco Plantations Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gozco Plantations Tbk and Super Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Super Energy Tbk are associated (or correlated) with Gozco Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gozco Plantations Tbk has no effect on the direction of Super Energy i.e., Super Energy and Gozco Plantations go up and down completely randomly.
Pair Corralation between Super Energy and Gozco Plantations
Assuming the 90 days trading horizon Super Energy Tbk is expected to generate 1.92 times more return on investment than Gozco Plantations. However, Super Energy is 1.92 times more volatile than Gozco Plantations Tbk. It trades about 0.06 of its potential returns per unit of risk. Gozco Plantations Tbk is currently generating about -0.07 per unit of risk. If you would invest 231,000 in Super Energy Tbk on August 28, 2024 and sell it today you would earn a total of 9,000 from holding Super Energy Tbk or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Energy Tbk vs. Gozco Plantations Tbk
Performance |
| Timeline |
| Super Energy Tbk |
| Gozco Plantations Tbk |
Super Energy and Gozco Plantations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Energy and Gozco Plantations
The main advantage of trading using opposite Super Energy and Gozco Plantations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Energy position performs unexpectedly, Gozco Plantations can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gozco Plantations will offset losses from the drop in Gozco Plantations' long position.The idea behind Super Energy Tbk and Gozco Plantations Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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